Rogers Reports First Quarter 2010 Financial and Operating Results

Rogers Communications Inc. today announced the filing of its consolidated financial and operating results for the three months ended March 31, 2010.

Financial highlights are as follows(1):

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Three months ended March 31, (In millions of dollars,except per share amounts) 2010 2009 % Chg
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Operating revenue $ 2,887 $ 2,747 5
Operating profit 1,122 1,082 4
Net income 380 309 23
Basic and diluted net income per share $ 0.64 $ 0.49 31

As adjusted:
Operating profit $ 1,163 $ 1,005 16
Net income 408 256 59
Basic and diluted net income per share $ 0.69 $ 0.40 73
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(1) For a detailed discussion of our financial and operating metrics and results, please review our 2009 Annual Report together with our first quarter 2010 MD&A and our first quarter 2010 Unaudited Interim Consolidated Financial Statements and Notes thereto which can be found at www.rogers.com and on SEDAR at www.sedar.com or on EDGAR at www.sec.gov.
"Our first quarter results reflect continued top line growth combined with good traction on cost controls. We delivered double-digit adjusted operating profit growth, margin expansion at all three segments, and a 27% increase in free cash flow," said Nadir Mohamed, President and Chief Executive Officer of Rogers Communications. "Our focus on wireless data and attracting and retaining higher value customers continues to pay dividends, while the improved results in our Media division reflect the actions we took in 2009 to improve our ratings and cost structure. Across the board we are off to a solid start in 2010."

Highlights of the first quarter of 2010 include the following:

– Generated consolidated quarterly revenue growth of 5%, with Wireless network growth of 7%, and growth of 6% at Cable Operations and 6% at Media. Wireless and Cable Operations adjusted operating profit increased by 17% and 10%, respectively, while Media returned to a profit position with $18 million growth in adjusted operating profit versus the first quarter of 2009. This was partially offset by the revenue decline at Retail. Revenue growth and cost reduction initiatives combined to drive adjusted operating profit margin expansion of 370 basis points on a consolidated basis, with Wireless network margins up 440 basis points, Cable Operations margins up 160 basis points, and Media margins up 620 basis points.

– Wireless network revenue growth was fuelled by data revenue growth of 40% and postpaid net subscriber additions of 47,000. Wireless data revenue now comprises 26% of Wireless network revenue and was helped by the activation and upgrade of approximately 348,000 additional smartphone devices during the quarter, predominantly iPhone, BlackBerry and Android devices, of which approximately 35% were for subscribers new to Wireless. This resulted in subscribers with smartphones representing 33% of the overall postpaid subscriber base at March 31, 2010, up from 23% at March 31, 2009, and generating ARPU nearly twice that of voice only subscribers.

– Additions of television, Internet and telephony subscribers at Cable all improved from the prior year with Internet subscriber penetration at 71% of television subscribers, digital penetration at 74% of television households, and residential voice-over-cable telephony penetration at 42% of television subscribers.

– Wireless announced a strategic business relationship with TBayTel to extend HSPA service across Northern Ontario giving Rogers and TBayTel customers significantly expanded 3G coverage across communities and  major highway corridors covering an area of close to 300,000 square kilometers.

– Wireless, through its 50%-owned Inukshuk Wireless Partnership,  entered into an agreement to acquire from Craig Wireless approximately 61 MHz of broadband radio service spectrum in the 2500 to 2690 MHz frequency range across the provinces of British Columbia and Manitoba, as well as between 6 to 24 MHz of miscellaneous spectrum in certain Manitoba markets.

– Cable announced that the Rogers On Demand Online portal, Canada’s leading online destination for primetime and specialty TV programming, movies, sports and web-only extras, is now experiencing in excess of two million page views per month and has almost 100,000 registered users. By expanding the TV experience to the Internet, our Cable, Internet and Wireless customers can now enjoy their TV anywhere, anytime with a rapidly expanding library of top programming wherever they have an Internet connection in Canada.

– Cable acquired 100% of the outstanding common shares of Blink Communications, a facilities-based, data network service provider that delivers next generation and leading edge services to small and medium sized businesses, including municipalities, universities, schools and hospitals, in the Oakville, Milton, and Mississauga, Ontario areas.

– Our Board of Directors approved a 10% increase in the annualized dividend rate to $1.28 per share on February 17, 2010, and immediately declared a quarterly dividend of $0.32 a share on each of our outstanding shares at the new, higher rate. The Board also approved the renewal of a normal course issuer bid to repurchase up to $1.5 billion of Rogers’ Class B shares on the open market during the following twelve months.

– We repurchased 9 million RCI Class B Non-Voting shares for $302 million during the quarter under our $1.5 billion share buyback program and paid dividends on our common shares totalling $175 million.

– For the quarter, our free cash flow, defined as adjusted operating profit less property, plant and equipment expenditures and interest, was $629 million representing an increase of 27% from the same quarter last year while adjusted net income grew by 59%. On a per share basis, free cash flow increased by 37% over the same period reflecting share buybacks over the past year which decreased the base  of outstanding shares, while adjusted earnings per share increased by 73%.

This summary of our first quarter 2010 earnings ("earnings release"), which is current as of April 27, 2010, should be read in conjunction with our first quarter 2010 MD&A, our first quarter 2010 Interim Unaudited Consolidated Financial Statements and Notes thereto, our 2009 Annual MD&A and our 2009 Annual Audited Consolidated Financial Statements and Notes thereto. The financial information presented herein has been prepared on the basis of Canadian generally accepted accounting principles ("GAAP") for interim financial statements and is expressed in Canadian dollars. Please refer to Note 25 of our 2009 Annual Audited Consolidated Financial Statements for a summary of the differences between Canadian GAAP and United States ("U.S.") GAAP for the year ended December 31, 2009.